For commercial property tenants, the only real estate that matters today is connected real estate—highly-connected real estate. Square footage is no longer the key number business tenants look at. And, location is no longer king. The factors that make deals—and break deals—are what kind of connectivity and technology infrastructure a property can provide to the company looking for office space.
That is because nearly every company’s operations are highly dependent on connectivity that runs nearly every aspect of their business—from web-based applications to private clouds to almost every other component of their IT operations. This is true not only for companies in the tech industry, but also for companies across every industry. Regardless of whether it is a dot-com company, a tractor manufacturer or a company that makes sprinkles to go on ice cream cones, everything runs on technology that requires reliable connectivity. And downtime is not simply about the inconvenience of not having email. It means core aspects of these businesses come to a screeching halt: sales, engineering, customer service, production operations and more. All of it lives on connectivity, which is why the real estate market for large enterprises and mid-sized businesses has become so focused on technology issues that were peripheral to tenant agreements in the past.
Today, real estate has become first and foremost a technology buy. Technology needs shape the specs that companies put on paper for their search for office space, and technology is a major focus of every tour of potential office space. And increasingly, members of a company’s technical team are involved in the final say about which property gets selected. In an age when a few hours of digital downtime can cost a company more than it spends on real estate in a year, the stakes are astonishingly high. That is why the launch of Connected Real Estate Magazine is so valuable for exploring how dramatically intertwined technology and real estate have become, particularly in the commercial market.
The central role that technology plays in the selling process for commercial real estate makes it incredibly important for real estate professionals and property owners not only to talk the talk on these subjects but also to get ahead of customer needs and proactively upgrade their properties to be more competitive in terms of technology capabilities. The reality is that the ideal square footage, a gorgeous view from the corner offices and a health club on the first floor are not going to overcome a building’s poor connectivity.
My goal with this article is to dig into some of the key criteria that large enterprises and mid-market companies will be looking for, and—more importantly—give property owners and brokers a checklist of steps to take to out-compete other properties on connectivity to win over these lucrative tenants. The guidance I provide below is based on working for a couple of decades in one of the toughest commercial real estate markets in the world—New York City—but the same lessons and advice hold true for every other U.S. city because the demand for connected real estate is the new normal everywhere rather than a phenomenon limited to places like New York City and Silicon Valley.
So, where do you start in order to be prepared to talk to these prospective tenants and meet their needs? A good place to start is to simply figure out how well connected your property is. Sounds easy, right? Well, it has been anything but easy for people marketing properties and for those seeking space. That’s because the available information has frequently been either incomplete or out of date. The result is that brokers, property owners and tenants find it very difficult to answer even the most basic questions about how connected a building truly is.
To fill this void, an organization called WiredScore developed an international standard for measuring internet connectivity in buildings. It provides owners, asset managers and leasing brokers with a simple-but-critical tool to market their properties and to answer the questions they get from prospective tenants. WiredScore not only tells you a building’s strengths, but also clearly indicates areas for improvement that are directly mapped to the wishlist that commercial tenants have in mind when they are looking for new space. With a presence in dozens of cities and hundreds of commercial buildings (and growing) totalling more than one billion square feet, WiredScore is an ideal place to start, not only because it tells you about your building, but also because it provides a simple way to compare to your competition.
Now that you know where you stand, what can you do to make your building more connected?
First, you can address the single biggest issue that every prospective tenant is going to have: redundancy. Redundancy means a company’s operations will stay up and running even if one source of connectivity goes down. For too many buildings, the only source of connectivity is an underground fiber that comes into the building typically from under the street. Sometimes buildings are labeled as redundant because they have two fiber lines, but that is not true network redundancy. Here’s why: The most common cause of outages is not a dramatic, widespread utility outage that affects an entire city; it’s much more likely to be a construction crew digging in the wrong place and cutting wires in the process. And two wires located side-by-side are just as easily cut as one that is alone. These outages don’t make headlines like larger utility outages, but they are just as devastating to companies’ operations if they are solely reliant on the underground fiber.
By adding a second form of connectivity, a property can provide redundancy that ensures that its tenants stay up and running if a backhoe digs a few inches too deep or a few inches too far to the left. These kinds of fiber cuts and other similar outages are rampant in U.S. cities where much of the infrastructure is buried just underneath the surface of streets. In WiredScore’s 100-point scoring system, a technology like Fixed Wireless adds a hefty nine points to a building’s overall score because it eliminates the single point of failure that underground fiber can represent. Fixed Wireless provides enterprise-class connectivity via a dedicated line-of-sight wireless connection that is beamed to the building and connected to a completely different network from the one coming in underground. This provides true “network diversity,” which will give tenants peace of mind that they will continue to have connectivity no matter what happens to the underground fiber. In the process, having this redundancy eliminates one of the most common reasons why prospective tenants walk away from a property.
Adding truly diverse redundancy through Fixed Wireless is one of the most important changes to make to go from being a property that gets ruled out by prospective tenants to one that makes the short list. One thing that I really like about the WiredScore analysis is that it provides a clear roadmap about what other potential upgrades can be made and how much more appealing those will make a property. That simplifies the cost-benefit decisions about which steps to take and which steps to hold off on. For example, the analysis may indicate that your building has poor interior cell coverage due to the structure of the building and its position relative to other nearby buildings. This kind of connectivity is also very important to commercial tenants and their employees, so you may choose to add antenna installations inside the building that supplement the signal coming in from outside.
Improving the connectedness of your building can make a huge difference in the quality of your tenants and the rates you can charge. The key is not to follow a rigid formula, but instead to be more educated about how connected a building is, be better prepared for the kinds of technology specifications tenants will have, and take proactive steps to fix weaknesses that will have such a strong spotlight on them during meetings with prospective tenants.
Looking to get the latest information about Wireless Infrastructure, 5G, Smart Buildings, IoT, and Small Cells or just want to see what we’ve been following throughout the week, we’ve got you covered. Subscribe Here to receive our weekly Newsletter.